The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. I welcome your feedback in the comments:

The earnings season is a slow train coming. The contents of these conference calls suggest the economic recovery is holding up, if with a note of caution. Intel noted stronger global demand, although at a slower pace than in the first half of the year. JPM highlighted increased M&A activity. At the same time, it said concerns about the economy and the political picture may discourage consumers and businesses from spending and investing. One hotel group found meetings are rising even as most consumers were hesitant about food and beverage purchases. And CSX reported strong volumes and increased carloads, while mentioning issues regarding possible government regulations. – Bloomberg

President Barack Obama’s approval rating, today and throughout his presidency, has been substantially higher than Congress’ approval rating — and to a larger degree than most recent presidents. This suggests he is performing above par relative to the broader political climate. – Gallup

White House gives up on finding a CEO to replace Summers as chief economy advisor; sources say finding a CEO willing to take the job has proven difficult. – WSJ

“A Quantitative Easing backlash is building from the likes of Stephen Roach of Morgan Stanley. Roach is leading the pack, urging a reexamination of something that most people accepted - that the Fed’s $1.5 trillion of easing in 2008 was pretty effective. Former IMF research chief Michael Mussa says QE1 was justifiable to prevent a global meltdown, but a similarly large second round seems rash in a growing economy. He notes that no large economy has ever tried anything similar, even during the Great Depression, and there may be unknown side effects, especially if it remains in place for years” – Politico – this was a lengthy topic in Bernanke’s speech this morning. Namely that we have very little data and experience with QE and that makes its effects more uncertain.

From a new paper, by Angela Maddaloni and Jose-Luis Peydro of the ECB, “We provide suggestive evidence that too low for too long monetary policy rates, by inducing a softening of lending standards and a consequent buildup of risk on banks’ assets, were a key factor leading to the financial crisis and possibly triggering, through the subsequent bank credit reduction, a real and fiscal crisis.” – Bloomberg

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The QE analysis by Roach is severely flawed. The Fed wouldn’t be thinking about it if the first round was highly effective and the economy were growing. Obviously they expect negative GDP, or this wouldn’t be on the table.

There is no inflation.

The stock market is broken. Major stocks are flash-crashing every day.

One of the biggest banks in the country (BAC) is down 50% since April.

The US is not solvent and will need austerity (expect bond yields to soar).

The Fed has only accomplished one thing with their jaw-boning: Suckering enough people to buy into the rally and forcing them out of cash and into the markets, so they can be robbed once again.

The only question is: Will they ever learn?

They FAILED the test in the dot com bubble.

They FAILED the test in the real estate bubble.

They are FAILING the test now in the debt laden ponzi scheme market we have now.